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Last week three iconic local retail brands shut their doors in my city. Whilst traditional “bricks and mortar” retailers continue to blame their demise on the growing threat from online, the real threat is complacency in the face of a changing market. But it’s an issue that e-commerce businesses need to be mindful of also.

Listed on the New Zealand stock exchange, Kirkaldie and Stains had an amazing history catering for high-end retail in the capital city. The firm was started in 1863 by a pair of immigrant entrepreneurs and is one of the oldest surviving retailers in the country. But the writing has been on the wall for some time, with ongoing financial losses and flagging share price. Subject to shareholder approval, the company will be acquired and re-branded by Australian retail giant David Jones.

The historic Bank Arcade is one of the few tasteful retail venues in the region. Longtime tenant Rixon Groove was an upmarket shirt and tie retailer and manufacturer that opened to much fanfare in 1991, catering for inner city businessmen and office workers. I often walked past that tiny shop and noticed, unlike its busy neighbours, there was sadly almost never a customer in sight. With the price of a shirt hovering around $200 and fashion trending away from formal attire in the workplace, it’s not hard to see what went wrong.

Shoe retail is sometimes regarded as the most competitive category, but boutique shoe store Minnie Cooper was always a hit with the ladies. Rather than go the way of the other dinosaurs, the business has elected to close its stores and go 100% online. They will continue to face huge competition, but without the substantial overheads of a high street presence. It will be tough, but least Minnie Cooper is attempting to adapt to the changing market.

Online businesses also face challenges and must be prepared to adapt and innovate. Customers online are fickle and have the attention span of a small fruit fly. Barriers to entry are relatively low and very few online retailers have a natural monopoly in their market. So e-commerce properties that fail to remain fresh and relevant have a limited lifespan in cyberspace. Addressing a huge global market is a far more interesting proposition, but shirts and ties all look much the same. Clearly differentiating your product offering against dozens of competitors requires a lot of imagination.

Paul Spence is a commentator, technology entrepreneur and is a co-founder of iwantmyname, a New Zealand based global Internet venture. You can follow him on Twitter @GeniusNet

It’s Global Entrepreneurship Week this week, with a focus on encouraging young entrepreneurs to step up all around the world. Unfortunately GEW seems to have bypassed New Zealand this year – but not to worry – there’s still a great deal happening in the start-up, tech and innovation space.

But lately I’ve become a little less optimistic that we are heading in the right direction in terms of supporting a high tech business start-up culture. Can start-ups really be artificially manufactured and then massaged into life, like characters on a reality TV show? Why are our academic institutions still failing to commercialise publicly funded intellectual property?

Admittedly incubation has had a somewhat chequered history in New Zealand to say the least and the jury is still out on whether intense “accelerator” programmes can work well in a small, distant and (relatively) capital poor market like ours. But who’s calling the shots on public investments in technology these days? Disturbingly, the New Zealand government’s 2015 science investment round still does not even mention a specific category for ICT. This raises questions about priorities, especially given that ICT companies have a demonstrably shorter development cycle than biotech and manufacturing.

The current crop of start-up programmes seem overly focused on creating opportunities for early stage investors, rather than advancing regional economic development. The focus should be in providing local foundations for high value, globally scalable businesses. For example, the most promising of the recent Lightning Lab alumni almost immediately relocated to the United States. But perhaps I’m missing the point? The departure of Lightning Lab itself from Wellington also underlined for me precisely why public servants and executives in suits should never be allowed to meddle with “innovation” initiatives.

Maybe none of that matters, because ultimately it’s the educational and motivational opportunities that are most meaningful. The various initiatives on offer also raise the profile of entrepreneurship as a career option. That’s important because it’s clear that the continuing lazy media obsession with sporting and entertainment “heroes” does little to encourage our young people into business at present.

What is encouraging however, is the fact that techies and start-up fanatics have become a lot more self-organising lately and are just getting on with it. I daresay the majority of interesting tech start-up companies of the future will probably get going in the same old way they have done historically – with a couple of mates bouncing an idea around over a beer and then raising some cash AFTER they get customers on board. Those companies will be thinking global from day one if they are smart. Global entrepreneurship should be the focus all year round.

Want to keep in touch with the best tech and start-up events? Make sure you sign up for the New Zealand edition of the free weekly Startup Digest.

Paul Spence is a commentator, technology entrepreneur and is a co-founder of iwantmyname, a New Zealand based global Internet venture. You can follow him on Twitter @GeniusNet

Recently a friend asked me how new companies from a remote location like New Zealand can get noticed in crowded markets on the world stage, without breaking the budget. The answer is simple. Build a fantastic product and love your customers madly.

There are other techniques of course, including referral strategies and affiliate programmes, partnering with other businesses where there is the right fit and optimising content for online search. Also work out which social media or social apps your customers like best and hang out there. You notice I didn’t mention actually paying for advertising. Finding the best mix of tools is largely an experiment, don’t let anyone tell you otherwise. Personally I favour generating high value content that draws in viewers in a subtle way. Search engines get smarter every day and will trash low value content, pushing you down the ladder. Fortunately I love writing about technology and business; but if you don’t – find someone who does ( or invite me to write a guest blog article! )

Internet companies have an unfair competitive advantage over companies flogging consumable goods of course. You don’t have to have a physical presence in market to make sales, scalability is only limited by your ability to manage the technology and capital requirements are minimal. The downside is that the barriers to entry are relatively low. That’s both an opportunity and a threat. It means there’s lot’s of other competitors in your space, but it also means many of them are crap. Don’t become one of those. Pay attention to customer feedback and take away what’s important. You won’t win by responding to every single feature request.

I’m currently burning 3-4 hours of my day working on the customer support side of the business at iwantmyname. We’ve adopted a policy that all employees must spend part of their day engaged in customer support. It’s the quickest way to find out where the points of pain are for your customers and a great way to learn more about the technology itself. It can also be humbling both when you solve a problem for a grateful customer and when you fail to do so – and boy do they let you know! It’s fun riding the long tail, but you need balls of steel and the hide of an elephant sometimes.

Have a safe and happy Christmas holiday and a fantastic 2013.

Paul Spence is a commentator, technology entrepreneur and is a co-founder of iwantmyname, a New Zealand based global Internet venture. You can follow him on Twitter @GeniusNet

Railways, coal mining and industrial scale manufacturing were all economic activities that had their origins in the 19th Century. This week has not been a good one for anyone employed in those businesses in New Zealand, with widespread redundancies having been announced. The reasons for the collapse of these industries differ, but they share the historical hallmarks of “creative destruction” as expounded by Austrian economist Schumpeter.

Schumpeter was remarkably prescient for a man of his time. Drawing upon the political organisational theories of both Marx and Weber he concluded that innovation was the primary driver of economic change and that every industry was subject to a cycle of emergence, ascendance and decay. He controversially proposed that democracy could never truly empower the ordinary citizen because the electorate were largely ill-informed or ignorant. His predictions that social democratic governments would emerge in the West (rather than socialist revolution) have largely come true.

None of this will be of any consolation to our miners, factory workers and railway engineers. But it does underline precisely why we need to be moving up the value chain through exporting our knowledge rather than relying upon filthy, dangerous and extractive commodity based industries. After more than a decade talking about it, the penny has finally dropped and the government is now attempting to reorganise commercialisation of publicly funded research and has been increasing the investment in research, science and technology. Bullish talk by government ministers about opening up more public land for mineral exploitation also seems to have faded for the time being. That’s why I spend a lot of my time promoting and supporting knowledge based entrepreneurship and emerging technologies and industries.

Paul Spence is a commentator, technology entrepreneur and is a co-founder of iwantmyname, a New Zealand based global Internet venture. You can follow him on Twitter @GeniusNet

Economist Brian Gaynor’s recent article on why we will never “catch up” to Australia was another sobering reminder of the hard road that New Zealand has ahead. Invoking a sporting analogy by beating Australia may be a popular rally to arms, but it focuses public attention on completely the wrong set of goalposts.

Another sobering occasion was when we sadly learned of the passing of Sir Paul Callaghan, one of New Zealand’s most passionate science communicators and technology entrepreneurs. Sir Paul lived every moment and notably even turned his cancer treatment regime into an experiment. More importantly he was one of the most ardent promoters of science and technology commercialisation as a means of growing New Zealand’s economy.

“Sir Paul was a true public intellectual who earned the respect of everyone, including those who disagreed with him”, stated the government’s sternly worded Ministerial press release reporting news of Sir Paul’s death. Curiously, outside of Cabinet, I can’t name a single (intelligent) person who actually disagreed with his thesis that New Zealand urgently needs to ramp up economic growth through more investment in research, science and technology commercialisation, rather than continuing with an over-reliance on flogging unprocessed, environmentally unsustainable dairy commodities to the world.

To its credit, the government has finally moved to increase research funding and there are more frequent mutterings along the lines of “doing something” about uncovering intellectual property locked up within our many publicly funded institutions. But those of us who looked on frustrated over the last decade as the “Knowledge Wave” withered on the vine, are becoming more and more concerned that the opportunity to fully promote science and technology as an economic driver is disappearing.

Beyond pumping more cash into research, we need a huge cultural shift involving both governmental agencies and the public mindset. As clean-tech entrepreneur Nick Gerritsen stated at a recent seminar, “we need more millionaire scientists and fewer millionaire sportsmen”. With the loss of Professor Callaghan, I’m left wondering who will be brave enough to pick up the mantle.

Innovation, incubation and competitiveness are firmly back on the political agenda. 2011 has been a busy year, with the government setting about reforming publicly funded scientific research and reconfiguring IRL in an effort to drive more commercialisation activity in the technology sector. The government funded trade agency has also been talking up successes from its incubator programme. In the meantime, the recently formed Productivity Commission has quietly begun developing an academic framework to address infrastructural inefficiencies in the New Zealand economy.

In this context, it was unsurprising to see some recent commentary that was highly critical of the manner in which government gets involved in innovation and business. More specifically, Rowan’s comments alluded to some deficiencies in the methodologies being employed by business incubators when advising software start-ups. Notwithstanding the fact that incubators are generalists and lack the huge depth of experience and background of success that Rowan brings to his own web and software ventures, there were some fair criticisms which pleasingly generated a lot of intelligent follow-up discussion.

Where I parted company with this debate however was when the tone shifted towards questioning the necessity for providing events to engage the start-up community. Most readers will be aware that I’m deeply involved in organising such activities in addition to my role as a co-founder of a couple of tech companies. One of these companies is pre-revenue start-up, the other is growth phase and profitable. Being involved in the community is a deliberate strategy which is partly altruistic (because it’s fun), but also good for business. We are only as strong as the people around us.

The government’s moves to redefine how we approach identifying and commercialising high value science and technology based ventures are oxygen for our economic flame; so too are the various contributions made by formal incubators, informal “innovation hubs”, university commercialisation offices and the various business related events and competitions. The Ministry of Science & Innovation’s report on Powering Innovation even talks about “…the creative connection of talented minds across discipline boundaries“. We do not need to emulate Silicon Valley, but we should learn from that ecosystem model.

Around the world, entrepreneurship is increasingly seen as both a legitimate career option for young people and a growth spark in an otherwise dull economy. At a time when youth unemployment stands at around 30% in New Zealand, we cannot afford to ignore the opportunity of infusing young people with an entrepreneurial spirit. I recently attended the 30th anniversary celebration of the Young Enterprise Trust. This organisation provides entrepreneurship programmes for high schools and counts such luminaries as Rod Drury and Seeby Woodhouse amongst its alumni, demonstrating the importance of a community approach to entrepreneurship education.

Building an entrepreneurial and export focused culture has never been so important as now, with traditional models breaking down faster than ever. Knowledge sharing and relationship building within and amongst our specialist communities is foundational to strengthening our innovation ecosystem. We can no longer afford to operate in silos or to make the assumption that there is only a single approach to building cool businesses that solve real problems and generate economic returns.

We live in interesting times. Last month I attended a seminar looking at productivity in the New Zealand economy and how we can improve. The most overwhelming aspect of the event however was that most of the attendees were white, male and aged 50 or older. Furthermore, much of the focus was on making changes to macroeconomic settings, rather than making an attitudinal shift. If we are to address this issue in a meaningful way we need to engage with a far broader church, including politicians, scientists, entrepreneurs and investors from across the spectrum who are committed to change – not just economists.

With our over-dependence on high volume, low value food commodities to generate income and an over-investment in non productive assets such as property, we have seen per capita income dropping rapidly over the last decade. The flow-on effect has been a return to net outwards migration at levels unseen in the last thirty years. New Zealand is close to entering a death spiral, in terms of an inability to pay for social services in the future, if we don’t fix this right now! Within the next thirty years we will reach a tipping point at which a minority of the population is working to support the dependent majority.

Each speaker at the seminar was tasked with presenting a simple, yet radical idea that could move the goalposts on productivity, in an effort to stem the flow of emigrants and ensure we can fund our future. Some of the ideas were downright batty, but at least people were thinking and talking – which is more than successive governments have achieved so far. In fact, perhaps the single biggest issue is leadership inaction in the face of political expediency. It will take more than speeches and a cup of tea to solve these problems. So here’s my ten cents worth.

It seems we can easily find $10 million to build a temporary booze hall for rugby patrons on Auckland’s waterfront, yet we continue to struggle to provide a coordinated approach to identifying and commercialising world class science in New Zealand. If the government lacks the gumption to look beyond a three year electoral cycle, then the private sector must take a stronger leadership position on the matter.

There’s plenty of cash sloshing around in superannuation funds, but if it means accessing foreign capital and connections to get on with the job, so be it. Endeavour capital see the opportunity, why not others? We should aim for 100+ Lanzatech or Endace type companies. That requires making project opportunities transparent and going big, whilst retaining a NZ Inc. stake in the intellectual property. It means identifying top talent to lead commercialisation. It will also require a complete change of mindset in some of the more conservative knowledge silos around the country.

The Global Innovation Index judges nations’ progress against a basket of parameters including infrastructure, research output plus market stability and institutional strength. In 2010 New Zealand surged ahead to 9th place out of 125 countries after languishing at 27 the previous year. But in 2011 we dropped back a little to 15th place, or more correctly, we were slightly overtaken by our close competitors U.S., U.K., Ireland and Canada. Whilst there’s no need for alarm, we must remain vigilant that government keeps the right settings in place and that businesses continue to take advantage of global opportunities by leveraging our creativity and growing new knowledge. I remain optimistic.

Last week I attended the outstanding Ice Ideas conference presented by the much lauded Icehouse business incubator which has a close relationship with the University of Auckland and has been involved in raising $50 million in funding for high-tech companies in the ten years since its inception. The incubator has now set itself the goal of achieving 3000 new business launches over the next decade. It’s an unashamed grab for more deal flow and a call to action for the community to support the initiative financially, for the betterment of NZ Inc.

Incubation is certainly a valuable aspect of the overall innovation ecosystem and I applaud these efforts. But we must also ensure that other structural features are strengthened, not undermined. Not the least of these is ensuring that the spectre of a capital gains tax (CGT) on business asset sales never sees the light of day. On the other hand, some kind of modest taxation of gains on speculative property transactions certainly has merit, in order to encourage more productive forms of investment. Unfortunately the two issues, although related, tend to become intertwined in the minds of the public as politicians desperately seek to gain a foothold.

A capital gains tax on business sales would discourage investment and accelerate the loss of talent offshore by taking away one of the key competitive advantages that we have over other developed economies. It may also have a negative impact on New Zealand’s standing as an innovative and business investment friendly destination.

Speaker presentations from the Ice Ideas conference are available here.

Despite some over cooked fund raisings causing a few ripples recently . A couple of high profile trade sales underline the value that a great brand brings to a business.

There’s been a lot of talk recently about whether there’s another tech bubble forming, but I see two separate themes emerging. On the one hand there’s companies like Color and Pandora that raised funding purely on the strength of an idea and a solid team. Neither company has revealed how or when they will generate revenue. There was much hand wringing after Color’s VC round and Pandora’s share price crashed almost immediately post IPO. These are worrying signals in a market where entrepreneurs are being told to go out and raise as much cash as possible, whilst times are still good.

On the other hand, there are solid companies with good revenues and little debt that are cashing up through trade sale opportunities. The Go Daddy transaction was a case in point. This deal had been in the making for some time and looks like a win-win for both the founders and the institutional investors in terms of timing. Obviously it was of great interest to us at iWantMyName because GD are the largest domain registrar on the planet, with around a quarter of the entire global market.

Closer to home, the $139M buyout of listed drinks maker Charlies by Japan’s largest brewer Asahi also looks like a big win. What all of these companies have in common are great brand assets. Where they differ is that some of them not only do not generate profits, but in some cases the value proposition is less than clear. Even a great brand cannot compensate for these failings. Winning companies have recognisable brands, high performing systems or technologies and a means of generating repeating revenues. You’d have to be a right Charlie to invest in a company that didn’t have these attributes.

Unlimited Realities is living up to its name. Last year the company inked a deal to provide its gestural interface software for integration into Dell manufactured computers. Now the door has been opened by computer chip maker AMD. Fingertapps was showcased this week at the AMD Fusion Developer Summit in Seattle ahead of its rollout with AMD’s next generation of chips for Windows based PC and tablet devices.

The company, which has development offices in Wellington and Palmerston North recently appointed former Kiwibank CEO Sam Knowles as chairperson. It now seems to be on a rapid growth trajectory, having been one of the earliest providers of computer touch screen technology. We saw the “unlimited potential” of the product back in 2008 when we invited Unlimited Realities business development manager Ben Wilde to show off Fingertapps at Wellington to the World.

New Zealand companies are becoming increasingly adept at forging relationships offshore and the U.S. computing market is generally the most obvious first port of call. Fingertapps is yet another great example of high flying Kiwi technology going global from New Zealand.